Which option defines a credit cap?

The concept of a credit cap is best defined as the limit on credit transactions from an account. This means that a credit cap sets an upper boundary on the amount that can be borrowed or charged to a specific credit account within a particular timeframe. This limit is crucial for managing risk for both the lender and the borrower, as it controls how much credit can be extended and helps prevent overextension of borrowing.

This definition is important in the context of responsible credit use and lending, ensuring that consumers do not exceed their ability to repay. A credit cap is typically established based on various factors, including creditworthiness, income, and payment history. Understanding this aspect of credit management is vital for anyone working in financial services or involved in debt management.